Tencent-backed Meituan close to $3 billion-plus funding

Meituan Dianping, China’s largest group-buying and restaurant reviews service, is said to be close to finalizing a deal to raise at least $3 billion from investors including Capital Group and Tencent.

Meituan Dianping, backed by WeChat-operator Tencent Holdings Ltd. is said to be targeting at least USD 3 billion at a USD 28 billion valuation, Bloomberg reported. That would make it the world’s fifth-most valuable startup, surpassing SpaceX and WeWork Cos. It’s now hammering out the final details with investors including U.S. financial powerhouse Capital Group and a deal could be sealed within days, one of the people said.

Meituan is building a war chest as it vies for dominance in China’s so-called online-to-offline market. Formed in 2015 through the merger of Meituan.com and Dianping.com, it’s become the dominant player in the emerging market for internet-based services, from food delivery to movie ticketing via smartphone apps. Competitors backed by Alibaba Group Holding Ltd. have similarly ramped up funds to bankroll expansions into more cities and businesses.

Meituan is a marquee player in a war waged between Alibaba and Tencent, who’re using startups in food delivery and neighborhood services as proxies in their battle for mobile payments and internet usage. The deep-pocketed giants, both of which have market values of at least USD 400 billion, have splurged billions on expanding into on-demand services. Revenue from the sector is expected to reach USD 230 billion in 2018, according to consultancy IResearch.

Meituan’s latest fundraising effort emerged in August, when people familiar with the matter said it was seeking funds of between USD 3 billion and USD 5 billion. The Chinese startup, which in 2016 raised USD 3.3 billion at a valuation of USD 18 billion, said in May it had more than USD 3 billion in cash reserves. It said then it completes more than 18 million orders a day, with more than 240 million active annual buyers.